La. Insurance Rating Commission One Step Closer to Extinction

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The Louisiana Insurance Rating Commission will hold its regular monthly meeting on June 19 and if a bill to abolish the board passes the legislature, the June meeting may begin the countdown to its last one.

The panel moved closer to extinction on June 13, as a legislative committee decided it should be abolished in 2008.

The Senate Insurance Committee approved a bill backed by Gov. Kathleen Blanco that would accede to industry wishes and eliminate the politically appointed state board. The committee amended the bill so that the regulating body would cease to exist Jan. 1, 2008.

The measure moves to the Senate floor.

The panel also approved another part of Blanco’s insurance plan – $100 million in incentives for insurers – but changed it in a way that the administration opposes. Sen. James David Cain, the chairman, amended the bill so that it is now entwined with Cain’s plan to attempt to auction off all the policies now written by the state-backed “insurer of last resort.”

In the bill’s current form, the state would offer the money to firms that agree to begin doing business in coastal Louisiana – taking over policies now written by the state-backed “insurer of last resort,” Louisiana Citizens Property Insurance Corp. Under Cain’s amendment, that process of taking over Citizens policies could only happen after the state holds an auction of the Citizens policies.

The Blanco administration and the bill’s sponsor, Rep. Karen Carter, oppose the amendment, but Cain insisted that it would take three months at most to organize the auction. If no firm makes a reasonable bid, insurance companies would be able to begin taking over Citizens policies and get incentive money in return.

Cain said his plan would prevent the private firms from choosing the least risky policies, in central and north Louisiana, and leave the high-risk, hurricane-prone coastal properties covered by Citizens.

“You can’t let these people just come in and cherry-pick the best policies,” said Cain, R-Dry Creek.

Carter said she would fight to have Cain’s amendment removed from the bill.

Insurance Commissioner Jim Donelon also opposes Cain’s auction plan, favoring another aimed at reducing the number of policies now covered by Citizens. Under that bill, Donelon’s staff would offer bundles of hundreds of Citizens policies, drawn from around the state, and offer those packages up for auction.

That measure, by Sen. Reggie Dupre, D-Houma, awaits a vote on the House floor.

House Bills 678 and 960, and Senate Bills 153 and 185, are at http://legis.state.la.us/.